Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2013

Assets and liabilities measured at fair value

Assets and liabilities measured at fair value, including financial assets for which we have elected the fair value option, were as follows:

			Fair Value Measurements Using
			Quoted
			Prices
			in Active
			Markets		Significant		Significant
			for		Other		Un-
	Fair Value		Identical		Observable		observable
	Measure-		Assets		Inputs		Inputs
	ments		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
June 30, 2013:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	293	$	293	$	-	$	-
Securities available for sale
U.S. agency		13,414		-		13,414		-
U.S. agency residential mortgage-backed		185,260		-		185,260		-
Private label residential mortgage-backed		7,482		-		7,482		-
Other asset backed		10,979				10,979
Obligations of states and political subdivisions		124,433		-		124,433		-
Trust preferred		9,812		-		9,812		-
Corporate		2,395		-		2,395		-
Loans held for sale		35,529		-		35,529		-
Derivatives (1)		2,375		-		2,375		-
Liabilities
Derivatives (2)		-		-		-		-

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		7,506		-		-		7,506
Impaired loans (4)
Commercial
Income producing - real estate		1,771		-		-		1,771
Land, land development & construction-real estate		1,205		-		-		1,205
Commercial and industrial		1,894		-		-		1,894
Mortgage
1-4 Family		1,243		-		-		1,243
Resort Lending		573		-		-		573
Other real estate (5)
Commercial
Land, land development & construction-real estate		1,507		-		-		1,507
Mortgage
1-4 Family		657		-		-		657
Resort Lending		1,735		-		-		1,735
Installment
Home equity installment - 1st lien		82		-		-		82
Payment plan receivables Full refund/partial refund		2,668		-		-		2,668

(1) Included in accrued income and other assets

(2) Included in accrued expenses and other liabilities

(3) Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4) Only includes impaired loans with specific loss allocations based on collateral value.

(5) Only includes other real estate with subsequent write downs to fair value.

			Fair Value Measurements Using
			Quoted
			Prices
			in Active
			Markets		Significant		Significant
			for		Other		Un-
	Fair Value		Identical		Observable		observable
	Measure-		Assets		Inputs		Inputs
	ments		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2012:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	110	$	110	$	-	$	-
Securities available for sale
U.S. agency		30,667		-		30,667		-
U.S. agency residential mortgage-backed		127,412		-		127,412		-
Private label residential mortgage-backed		8,194		-		8,194		-
Obligations of states and political subdivisions		39,051		-		39,051		-
Trust preferred		3,089		-		3,089		-
Loans held for sale		47,487		-		47,487		-
Derivatives (1)		1,368		-		1,368		-
Liabilities
Derivatives (2)		1,320		-		861		459

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,814		-		-		8,814
Impaired loans (4)
Commercial
Income producing - real estate		3,727		-		-		3,727
Land, land development &construction-real estate		2,882		-		-		2,882
Commercial and industrial		6,581		-		-		6,581
Mortgage
1-4 Family		2,694		-		-		2,694
Resort Lending		380		-		-		380
Other real estate (5)
Commercial
Income producing - real estate		86		-		-		86
Land, land development &construction-real estate		3,190		-		-		3,190
Mortgage
1-4 Family		405		-		-		405
Resort Lending		3,535		-		-		3,535
Installment
Home equity installment - 1st lien		59		-		-		59
Loans held for sale relating to branch sale		3,292		-		3,292		-

(1) Included in accrued income and other assets

(2) Included in accrued expenses and other liabilities

(3) Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4) Only includes impaired loans with specific loss allocations based on collateral value.

(5) Only includes other real estate with subsequent write downs to fair value.

Changes in fair value for financial assets

Changes in fair values for financial assets which we have elected the fair value option for the periods presented were as follows:

	Changes in Fair Values for the Six-Month Periods Ended June 30 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
	2013										2012
	Net Gains (Losses)						Total Change in Fair Values Included in Current				Net Gains (Losses)						Total Change in Fair Values Included in Current
	on Assets						Period				on Assets						Period
	Securities		Loans				Earnings				Securities			Loans			Earnings
	(In thousands)
Trading securities	$	183		$	-			$	183			$	9		$	-		$	9
Loans held for sale		-			(2,241	)			(2,241	)			-			241			241

Reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

A reconciliation for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30 follows:

	(Liability)
	Amended Warrant
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(In thousands)
Beginning balance	$	(1,504	)	$	(328	)	$	(459	)	$	(174	)
Total gains (losses) realized and unrealized:
Included in results of operations		20			(25	)		(1,025	)		(179	)
Included in other comprehensive income		-			-			-			-
Purchases, issuances, settlements, maturities and calls		-			-			-			-
Reclassification to shareholders' equity		1,484			-			1,484			-
Transfers in and/or out of Level 3		-			-			-			-
Ending balance	$	-		$	(353	)	$	-		$	(353	)

Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at June 30	$	20		$	(25	)	$	(1,025	)	$	(179	)

Quantitative information about the Amended Warrant

Quantitative information about the Amended Warrant at December 31, 2012 follows:

(Liability)
Fair			Valuation	Unobservable	Unobservable
Value			Technique	Inputs	Input Values
(In thousands)

$	(459	)	Binomial Lattice Model	Probability of non-permitted equity raise		0.5	%
				Expected discount to stock price in an
				equity raise		10.0	%
				Dollar amount of expected capital raise	$100 Million
				Expected time of non-permitted equity raise	April, 2013

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis follows:

	Asset
	(Liability)
	Fair		Valuation	Unobservable	Weighted
	Value		Technique	Inputs	Average
	(In thousands)
June 30, 2013
Capitalized mortgage loan servicing rights	$	7,506	Present value of net	Discount rate		10.62	%
			servicing revenue	Cost to service	$	82
				Ancillary income		39
				Float rate		1.57	%
Impaired loans
Commercial		4,870	Sales comparison	Adjustment for differences
			approach	between comparable sales		15.6	%
			Income approach	Capitalization rate		9.4
Mortgage		1,816	Sales comparison	Adjustment for differences
			approach	between comparable sales		8.7
Other real estate
Commercial		1,507	Sales comparison	Adjustment for differences
			approach	between comparable sales		(4.5	)
			Income approach	Capitalization rate		11.0
Mortgage and installment		2,474	Sales comparison	Adjustment for differences
			approach	between comparable sales		44.2
Payment plan receivables		2,668	Sales comparison	Adjustment for differences
			approach	between comparable sales		7.5

December 31, 2012
Capitalized mortgage loan servicing rights	$	8,814	Present value of net	Discount rate		11.00	%
			servicing revenue	Cost to service	$	83
				Ancillary income		43
				Float rate		0.84	%
Impaired loans
Commercial		13,190	Sales comparison	Adjustment for differences
			approach	between comparable sales		16.7	%
			Income approach	Capitalization rate		10.8
Mortgage		3,074	Sales comparison	Adjustment for differences
			approach	between comparable sales		9.5
Other real estate
Commercial		3,276	Sales comparison	Adjustment for differences
			approach	between comparable sales		(12.4	)
			Income approach	Capitalization rate		12.3
Mortgage and installment		3,999	Sales comparison	Adjustment for differences
			approach	between comparable sales		(6.3	)

Aggregate fair value and aggregate remaining contractual principal balance for loans held for sale

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected for the periods presented.

	Aggregate Fair Value		Difference			Contractual Principal
	(In thousands)
Loans held for sale
June 30, 2013	$	35,529	$	(398	)	$	35,927
December 31, 2012		47,487		1,843			45,644

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

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- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

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